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TMI Blog2017 (7) TMI 827X X X X Extracts X X X X X X X X Extracts X X X X ..... at the same is in violation of Article 14 of the Constitution of India, the Writ Petition No.28497/2013 has been filed. 2. Taking note of the geographical position of the Union Territory of Puducherry, prevailing rate of tax for live chicken in Kerala, decision of the Government of Puducherry to prevent smuggling and to reduce the disparity, in the rate of tax between the State of Kerala and Mahe region of Union Territory of Pondicherry, decision of the Hon'ble Supreme Court in Sri Srinivasa Theatre and Others., vs. Government of Tamil Nadu & Others, reported in 1993 STC 201 (SC), at Paragraph No.10, the writ court held as follows: ''10. The legal principle deducible from the decisions of the Hon'ble Supreme Court relied on is that a taxing statute though enjoins greater latitude, is not beyond the pale of challenge under Article 14 of the Constitution and if the legislation leads to any in quality, it may violate the equality clause. After referring to several decisions, the Hon'ble Supreme Court referred to Weaver's Constitution Law and observed that class legislation is that which makes an improper discrimination by conferring particular privileges upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e grounds that Pondicherry Value Added Tax is discriminatory, and violative of Article 14 of the Constitution of India, and to the power of the Government in levying tax, classification and class legislation, rate of tax levied in the proximate State, namely, Kerala, a Hon'ble Division Bench of this Court, while upholding the validity of Puducherry Value Added Tax, 2012 (Act V/2012), at paragraph Nos.9 to 17 reasoned as follows: ''9. The challenge to the impugned amendment to the Puducherry Value Added Tax Act is primarily on the ground that the impugned enactment is discriminatory and violative of Article 14 of the Constitution of India. The petitioners are dealers in live chicken registered under the provisions of the Act and carrying on business in Mahe region of the Union Territory of Puducherry. In terms of Section 20 of the Act, goods specified in the First Schedule of the Act are not liable to tax. Entry 39 of the First Schedule includes live stock. It is not in dispute that the product dealt by the petitioners namely live chicken falls within the meaning of live stock. By virtue of the exemption, no tax is liable to be paid on the sale of live chicken by the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected from a large number of persons, all of whom stand in the same relation to the privilege granted and between whom and the persons not so favoured no reasonable distinction or substantial difference can be found justifying the inclusion of one and the exclusion of the other from such privilege. It was further pointed out that a classification must not be arbitrary, artificial or evasive and there must be a reasonable, natural and substantial distinction in the nature of the class or classes upon which the law operates. 11. In the case of Aashirwad Films vs. Union of India & Ors., reported in (2007) 5 MLJ 170 (SC), the classification was faulted as being only on the basis of language without anything more and therefore, having a different rate of tax was held to be exfacie arbitrary. In the case of Ayurveda Pharmacy & Anr., (supra) the Hon'ble Supreme Court held that the levy of higher rate of sales tax on Arishtams and Asavas is discriminatory, as they are also medicinal preparation and cannot be treated differently for the purpose of sales tax on the ground of their high alcoholic content. We may pointed out that the decision in the case of Aashirwad Films (supra), would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be made is for Mahe region for which tax has been imposed at the rate of 5%. The justification being, Mahe is adjoining the State of Kerala in which the sale of live chicken is taxable at 14.5% under the Kerala VAT Act. It came to the notice of the Government that the dealers like the petitioners, who deal in live Chicken in Mahe region were selling their products at the same rates as sold in Kerala State (border state), which is subjected to tax at 14.5% in that State. Thus, it was established that the dealers like the petitioners had availed the exemption and the benefit of the exemption was not passed on to the consumers. Therefore, the Government accepted the decision of the Empowered Committee and issued a notification with effect from 01.01.2012, which subsequently was made as an amendment to the Act (impugned Act). 16. From the counter affidavit it is seen that on account of making the transaction taxable at 5%, the Government of Puducherry has been able to generate an yearly revenue Rs. 6.7 crores, which are to be utilised for other developmental activities. Therefore, the distinction sought to be made for making the transaction taxable for Mahe region alone cannot b ..... 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